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CBSECommerce (English Medium) Class 12
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Syllabus

Overview of Controlling

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Estimated time: 35 minutes
CBSE: Class 12

Key Points: Concept of Controlling

  • Controlling means ensuring that organisational activities are performed according to planned standards.
  • It ensures that resources are used effectively and efficiently to achieve predetermined goals.
  • Controlling is required at all levels of management—top, middle, and lower levels.
  • It measures actual performance, identifies deviations from standards, and takes corrective action.
  • Controlling helps in improving future planning by identifying problems and completing the management cycle.
CBSE: Class 12

Key Points: Importance of Controlling

  • Achieves Goals – Ensures work is done according to plans.
  • Checks Standards – Reviews and improves performance standards.
  • Reduces Wastage – Promotes efficient use of resources.
  • Motivates Employees – Clarifies expectations and performance levels.
  • Maintains Discipline – Prevents dishonesty and ensures order.
  • Ensures Coordination – Aligns all activities toward common goals.
CBSE: Class 12

Key Points: Limitations of Controlling

  • Difficulty in Setting Standards – Some areas like morale and job satisfaction cannot be measured in numbers.
  • No Control over External Factors – Business cannot control government policies, technology changes, or competition.
  • Employee Resistance – Workers may oppose control as they feel it limits their freedom.
  • Costly Process – Control systems require time, effort, and money, which small firms may not afford.
  • Cost–Benefit Concern – The cost of control should not be more than the benefits gained.
CBSE: Class 12

Key Points: Relationship between Planning and Controlling

  • Planning sets standards; Controlling follows them.
  • No planning = No controlling.
  • Planning decides action; Controlling checks performance.
  • Planning looks ahead; Controlling reviews results.
  • Both support and improve each other.
CBSE: Class 12

Key Points: Controlling Process> Setting Performance Standards

  • It is the first step in the controlling process.
  • Standards act as benchmarks to measure actual performance.
  • Standards can be quantitative (cost, revenue, output, time, etc.).
  • Standards can also be qualitative (goodwill, employee motivation) but should be clearly defined.
  • Standards must be flexible to suit changes in the business environment.
CISCE: Class 12

Key Points: Controlling Process> Measurement of Actual Performance

  • After setting standards, actual performance is measured in an objective and reliable manner.
  • Performance should be measured in the same units as the standards for easy comparison.
  • Measurement can be done through personal observation, sample checking, and performance reports.
  • Wherever possible, performance should be measured during the work process, not only after completion.
  • Different areas use different measures, such as profit ratios, units sold, output produced, and quality checks.
CBSE: Class 12

Key Points: Controlling Process> Comparing Actual Performance with Standards

  • This step involves comparing actual performance with set standards.
  • It helps to identify deviations between actual and expected results.
  • Comparison is easier when standards are set in quantitative terms.
  • The difference between actual and standard performance shows the level of achievement.
CBSE: Class 12

Key Points: Controlling Process> Analysing Deviations

  • Small deviations are normal, but acceptable limits must be fixed.
  • Focus should be on key result areas (KRAs) that are critical to organisational success.
  • Critical Point Control means giving special attention to important areas where major problems can affect the whole organisation.
  • Management by Exception means only significant deviations beyond limits are reported to top management.
  • Causes of deviations (such as unrealistic standards, lack of resources, or external factors) must be identified before taking corrective action.
CBSE: Class 12

Standards used in Functional Areas to Gauge Performance

Production Marketing Human Resource Management Finance and Accounting
Quantity Sales volume Labour relations Capital expenditures
Quality Sales expense Labour turnover Inventories
Cost Advertising expenditures Labour absenteeism Flow of capital
Individual job Individual — Liquidity
Performance Salesperson’s performance — —
CBSE: Class 12

Key Points: Advantages of Critical Point Control

  • Saves managers’ time by focusing only on important deviations.
  • Helps management concentrate on critical areas of the organisation.
  • Allows routine problems to be handled by subordinates.
  • Encourages delegation of authority and improves employee morale.
  • Identifies serious problems quickly and keeps the organisation on the right track.
CBSE: Class 12

Key Points: Controlling Process> Taking Corrective Action

  • Corrective action is taken when deviations go beyond acceptable limits.
  • No action is needed if deviations are within the allowed range.
  • Corrective action may include training employees, increasing resources, or allowing overtime.
  • If deviations cannot be corrected, performance standards may need to be revised.
 
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